Review of mineral resources and ore reserves

The Phalaborwa Igneous Complex, situated south of Phalaborwa in the Limpopo province, comprises 14 distinct rock types,
each with a specific mineral composition, as illustrated in Figure 2. It is a vertical volcanic pipe, roughly kidney-shaped and
measuring between 1,5 and 3,5km in width and 6,5km in length. The complex consists of three conjoined lobes – namely the
North Pyroxenite, Loolekop and South Pyroxenite areas.

Apatite is the only phosphate-bearing mineral in the igneous complex. Although it is sometimes present in only very small
amounts, it is never completely absent and often figures as an abundant mineral constituent in the pyroxenite and foskorite
rock types. Copper and magnetite are present in the Loolekop lobe and are exclusively associated with foskorite and
carbonatite rock types.

As a result of exploration drilling, higher concentrations of apatite mineralisation, expressed as a percentage of P2O5, were
found in the Loolekop foskorite and pyroxenite rock types, as well as in the pyroxenite rock types of the north-west corner
of the North Pyroxenite lobe and the South Pyroxenite lobe. There are four mines currently operating in the Phalaborwa
Igneous Complex. Palabora Mining Company (PMC) operates a copper mine in the central portion of the complex, as well
as a vermiculite mine in the southern portion of the complex. Foskor operates two phosphate rock mining operations, one
situated in the North Pyroxenite area and another in the South Pyroxenite area.

Figure 1: Areas of interest with regard
to mineral resources and reserve

Foskor (Pty) Ltd has submitted all applications as required in terms of the Mineral and Petroleum Resources Developments
Act (No. 28 of 2002), related to minerals and reserves. Submissions were made for four new mining rights, three of which
have already been granted with the fourth in the process of being reviewed. Two submissions were made for the conversion
of old order used rights to new mining rights.

The mining rights already granted are:

New Mining Right – South Pyroxenite (LP30/5/1/2/2/09 MR);

New Mining Right – North Pyroxenite Extension (LP30/5/1/2/2/03 MR); and

New Mining Right – Stripping Area (LP30/5/1/2/2/22 MR).

Mining right applications submitted and under review are:

Northern Pyroxenite – North-west Corner (LP30/5/2/2/126 MR).

Applications for conversion of old order used rights to new mining rights submitted and under review are:

Old Order Used Right – North Pyroxenite (LP30/5/1/2/2/124 CMR); and

Conversion of remainder of all existing stockpiles (LP 30/5/1/2/2/125).

Management is confident that the outstanding applications will be finalised and approved by the Department of Mineral
Resources.

Figure 2: The geology of the Phalaborwa Igneous Complex

Geological exploration

From 1950 onwards, numerous drill tests have been
performed on the phosphate deposits, with the most recent
drilling completed in 2006. A total of 100,544 metres were
drilled to demarcate mineral resources in the North and
South Pyroxenite pits. Drilling was also performed in PMC’s
active tailings dam to evaluate possible mineral resources.

Samples acquired from the defined drill holes were assessed at Foskor’s chemical laboratory. Foskor is not currently
undertaking any new exploration projects.

Resource estimation

Geostatistical analysis of the drilling information was used to build 3-dimensional geological block models showing phosphate
mineral distribution. The block models for the two mining areas and the tailings dam were validated by correlating the original
drill-hole assay results with the estimated values determined by the geostatistical methods.

Mineral resources were classified as either measured, indicated or inferred, based on drill-hole densities, kriging efficiency
parameters and the cumulative knowledge and experience of Foskor’s geologists.

Mineral resources and reserves

The mineral resources and reserves were classified according to the South African Mineral Resource Committee (SAMREC)
Code. SAMREC defines a mineral resource as: ‘a concentration or occurrence of material of economic interest in or on
the earth’s crust in such form, quality and quantity that there are reasonable and realistic prospects for eventual economic
extraction’.

In terms of the Code: ‘the location, quantity, grade,
continuity and other geological characteristics of a mineral
resource are known, or estimated from specific geological
evidence, sampling and knowledge interpreted from an
appropriately constrained and portrayed geological model.
Mineral resources are subdivided, and must be so reported,
in order of increasing confidence in respect of geo scientific
evidence, into inferred, indicated or measured categories’.

To elaborate, a mineral reserve is the economically mineable
material derived from either a measured or an indicated
mineral source. It includes diluted and contaminated
materials and allows for mining losses. At minimum, an
appropriate assessment for a project should be a pre-feasibility
study. Alternatively, a Life of Mine Plan – detailing
considerations; modifications; realistically assumed mining;
and all other modifying factors such as the metallurgical,
economic, marketing, legal, environmental, social and
governmental impacts – should be drawn up.

North Pyroxenite Pit

The cut-off feed grade to economically produce a saleable
(36,5% P2O5) phosphate rock concentrate was calculated
(using methods originally made famous by leading
mathematician and mining consultant Kenneth Lane). The cut-off grade currently used for the North and South mineral
reserves is 5,5% P2O5, with material with a grade of between 4% and 5,5% P2O5 classified as marginal ore.

North Pyroxenite deposit

Foskor commenced mining phosphate-bearing ore from the North Pyroxenite deposit, situated in the north-western part of
the Phalaborwa Igneous Complex, in 1966. From 1961 to 1977, almost 150 drill holes or 24,377 metres were drilled. Between
1980 and 1984, an additional 55 holes were drilled around the existing pit, adding a further 23,200 metres.

The lithological (rock classification) information from these holes was interpreted to build a resource mineralisation model.
On this basis, the mineral resources were estimated and categorised as either measured, indicated or inferred. Design of
the open pit mine was based on optimisation runs using the Whittle Optimisation Programme (i.e. a global open pit mine
design system used to maximise net present values, and to balance schedules, blends and stockpiles). The North Pyroxenite
mineral reserves were estimated with modifying factors at 425,8 million metric tons as at 31 March 2011.

South Pyroxenite deposit

Drilling in the South Pyroxenite area began in the late 1950s and continued into the 1960s. In the 1990s an infill drilling
programme was terminated prematurely, due to financial considerations, but was completed during 2005/06. In total, 143
drill holes or 49,584 metres were drilled. Bulk and trench sampling were also done in the South Pyroxenite area.

The geological and resource models for the South Pyroxenite area were based on the exploration campaigns. The geological
contacts were interpreted from the drilling data. Ordinary kriging was used to estimate the P2O5 block model values, which
were finally validated through comparisons against the original drill hole data.

Mineral resources in the South Pyroxenite area were audited by Snowden Mining Industry Consulting in 2008. As at 31 March
2011, the reserves were estimated at 983,7 million metric tons.

Central area: PMC active tailings dam

Phosphate-rich tailings have been deposited in the PMC active tailings dam since the late 1970s. Foskor owns the rights
to the apatite in the tailings even though the dam is located on PMC’s premises. A resource of approximately 297 million
metric tons with an in situ (i.e. prior to processing) grade of 6,6% P2O5 was delineated through drilling and sampling during
the 1990s.

The data collected during exploration was evaluated for geostatistical application. An oriented block model was then created
and ordinary kriging was applied to estimate the grade distribution throughout the dam. The resources were categorised as
measured, indicated or inferred.

In 2003, a feasibility study (carried out with assistance from Snowden Mining Industry Consultants and Rio Tinto Technical
Services) to reclaim the tailings revealed that the planned capital and operating costs would exceed actual benefits. The
project was aborted and PMC’s use of the tailings dam continued.

Stockpiles

The carbonatite intrusion in the centre of the igneous complex is surrounded by apatite-bearing foskorite and pyroxene
pegmatoid rock types. PMC used to mine and stockpile the foskorite and pyroxene pegmatoid rock as a by-product of mining
the copper-bearing carbonatite. PMC selectively mined and stockpiled rock according to the Extension 100F Agreement
between Foskor and PMC. The agreement gave PMC the right to process rocks with a less than an agreed P2O5 grade, and
to retain every mineral except phosphate.

The rights to the rocks mined by PMC were determined by conventional grade control practices by PMC and monitored
by Foskor. PMC commenced mining in 1965, and in 2002 the opencast mine reached its maximum planned depth of 750
metres, after which PMC developed an underground mine in the same ore body below the opencast mine. The foskorite and
apatite-rich pegmatoid mined by PMC containing more than 6% P2O5 was stockpiled as foskorite stockpiles for Foskor. The
majority of these stockpiles have been mined and processed during the year under review, with the remainder accounted for
in the mineral resources and reserves statement.

Phalaborwa phosphate and vermiculite tailings

Currently, PMC operates an opencast vermiculite mine in the South Pyroxenite area, producing vermiculite concentrate from
a nearby plant. PMC transports the high P2O5 tailings from this plant to a stockpile close to Foskor’s East Crusher. Foskor
has reclaimed high phosphate tailings from this stockpile since 2006.

Responsible persons

The estimated mineral resources and reserves reported here were reviewed and endorsed by the following competent persons: